How to Find, Choose and Work with a Tax Professional
Finding a tax professional who can file your taxes correctly can be a challenge for many family child care providers.
The reason is that there are several unique tax rules affecting providers that many tax professionals do not fully understand. These include the ability to:
Claim most household items as “ordinary and necessary” business expenses.
Claim food expenses without food receipts using the IRS standard meal allowance rule.
Count all the hours you work in your home, including the number of hours you work on business activities when children are not present.
The simplest way to find someone would be to talk to providers in your area and ask if they use tax professionals and if they are satisfied with them. Someone who has experience doing family child care tax returns is more likely to file an accurate tax return for you. This is not a guarantee, but it is a place to start.
You may want to look for a tax preparer who has a credential (an accountant, Enrolled Agent, or even someone who worked previously for the IRS). However, someone with a credential does not necessarily mean that they will prepare your taxes correctly. The best credential to look for is an Enrolled Agent (EA). This is someone who has passed an IRS examination and is likely to be familiar with tax issues affecting small businesses such as yours. An EA can also represent you in the event of an IRS audit.
To find an Enrolled Agent, go to https://www.naea.org/ and click on “Find a Tax Expert.”
You may also want to ask your local or state family child care association or family child care union if they know of names of tax professionals who work with providers.
2021 Family Child Care Tax Companion
Each year I update this book for providers who use tax preparers. It contains a series of worksheets for you to fill out and then give to your tax preparer so he/she knows what to put on your tax forms. It also contains a chapter that answers many questions dealing with the unique tax issues affecting providers and cites IRS authorities you can use to resolve any disputes with a tax preparer or an IRS auditor.
Note: The 2021 Family Child Care Tax Workbook and Organizer is for providers who do their own taxes and explains how to fill out each federal tax form, line-by-line.
Tom Copeland – www.tomcopelandblog.com
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